Kings Offer to Build Arena on Downtown Site

Making the first official move, Los Angeles Kings owner Edward Roski signed and sent a proposal Friday offering to build a sports and entertainment arena next to the downtown Los Angeles Convention Center if Los Angeles agrees to a complex financing plan.

Under the terms of the nonbinding proposal, the $200-million-plus arena would become home to the Kings and Lakers for the 1999-2000 season. The teams would be obligated to play in the arena for 25 years.

“The submission of the proposal is a positive step in the eventual construction of an arena at the Convention Center site in downtown Los Angeles,” said John Semcken, vice president of Roski’s Majestic Realty, a negotiator in the process who confirmed the signing Friday.

Source said city negotiators have already agreed to the Kings’ proposal in concept, and key officials such as City Council President John Ferraro are expected to respond favorably in the next few days to the letter of intent. The city’s response will then initiate a formal process, which will require a City Council vote and a lengthy financing process.

Spokesmen for Ferraro and Councilwoman Rita Walters--both of whom have been party to the ongoing talks--said their bosses had not received the documents as of late Friday.

Inglewood Mayor Edward Vincent was shocked and angered late Friday when a reporter informed him about the Kings’ offer, and warned that his city would try to block the move “by any means necessary.”

“I feel that we’ve been, more or less, betrayed,” said Vincent, adding that the Lakers and Kings are regarded as part of the Inglewood family. “It’s like saying, ‘You’ve been a good husband, a good wife, but you know how things go. I’m going to divorce you anyway. So you have a couple of years to think about it.’

“Believe me, we’re going to think about it. . . . Let’s assume that they do decide to go to Los Angeles. Where are they going to play in the meantime? I’m making a statement. I’m not saying anything more than that.”

The Kings, still concerned about the complicated governmental approval process in Los Angeles, intend to maintain discussions with Inglewood regarding an arena site at Hollywood Park, Semcken said.

Sources said Friday’s proposal calls for Los Angeles to issue $60.5 million in revenue bonds for “public items,” which include the purchase of property along Figueroa and 11th streets.

The city also is liable for financial overruns beyond $60.5 million up to $80.5 million on a 50-50 basis with the Kings, sources said, and after that the Kings would be responsible.

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City negotiators, who wished to remain anonymous, intend to retire the revenue bonds with money raised from real estate, sales and parking lot taxes at the site, and in addition, an increase in hotel taxes. City officials said they will require almost $6 million a year in such revenue to meet bond obligations.

“There will be no general tax fund impact,” said a city official. “No tax on Angelenos. In addition to the revenue raised from the arena, there will be some sort of tourist tax.”

It was unclear late Friday who would be responsible if revenues were insufficient to pay off the bonded debt. But in most similar cases, the city would be required to fund the money from other sources.

An Ernst & Young economic impact report has predicted a $120-million impact annually in spending in the city and the development of more than 800 permanent jobs.

Under the terms of the proposal, the Kings would finance and build the 20,000-seat arena, which would include 2,500 club seats and 150 luxury boxes, and would lease the property now occupied by the Convention Center North Hall for $1 a year for 55 years. The city also would lease substantial chunks of property between 11th Street and Olympic Boulevard and between Figueroa and Flower streets to the Kings for $1 a year, and provide them the opportunity to purchase the land before the expiration of the 55-year lease for $1.

The Kings intend to build parking facilities with about 4,500 spaces, as well as retail, dining and entertainment facilities on the property, which would be claimed through eminent domain by the city. A city survey estimated that it would take more than $40 million--part of the $60.5-million public use money--to buy out the present property owners around the Convention Center.

The Kings’ partnership, which includes Philip Anschutz, has discussed building a “Rockefeller Center-like” ice rink near the arena, which would be available for public use.

The team also is considering attaching a commercial name to the arena, and experts suggest that they might make millions of dollars in providing such high signage visibility on both the arena and the Convention Center along the Harbor Freeway.

Sources said the proposal also calls for the city to produce all land, parking and ancillary related facilities and expedite all approvals required to allow construction on the arena to begin no later than Sept. 1, 1997.

The Kings did not deliver a proposal to Inglewood on Friday, but Semcken said one might be forthcoming.

“There is no timing urgency in Inglewood,” Semcken said. “We have not made a commitment to building an arena in Los Angeles yet. Our final commitment is a ways away. A 15-0 City Council vote with no changes to the proposal would be something really to get excited about. But if that vote is 8 to 7 . . . that wouldn’t be a very positive sign.”

King and city officials have been negotiating the deal for months and were still haggling over the impact of potential Convention Center expansion prospects late Friday. Convention Center officials have talked about expanding the facility, leading into a possible new hotel built by the Kings’ owners on Olympic Avenue.

If the Kings do not develop the Olympic and Figueroa properties within seven years of delivery, the city would have the option of terminating its lease with the Kings.

In two previous financial transactions, Lakers’ owner Jerry Buss allowed the Kings to buy out their lease at the Forum, and then agreed to become a tenant in the new arena.

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In another development Friday, Mayor Richard Riordan, citing a conflict of interest under state anti-corruption laws, said he is withdrawing from further participation in efforts to land the sports arena project.

Riordan, in an internal memo, cited his “significant” ownership interest in the Original Pantry restaurant and parking lot just outside the Convention Center site proposed for the arena.

“I am formally notifying you that pursuant to the rules and regulations of the California Political Reform Act, I am recusing myself from making or participating in any governmental decisions regarding the proposed arena,” Riordan wrote.

The memo directed his staff “to not submit any official documents for my review, consideration or approval regarding the proposed arena.”

“I do not intend to obligate or commit the mayor’s office to any course of action, and I do not intend to use my official position to influence any local or state public agency which might be considering matters related to the proposed arena,” Riordan said.

State law requires that an official with an economic interest in a matter over which he or she has some jurisdiction must refrain from participating in decisions.

Riordan, a multimillionaire businessman with a thick investment portfolio, has already participated in the project to some extent. He joined four officials in signing an Aug. 6 letter inviting the teams’ owners to submit a proposal, and his senior policy advisor, Steven Soboroff, has been a key figure in behind-the-scenes talks with the owners in recent months.

Times staff writers Jean Merl and Ralph Frammolino contributed to this story.